U.K. regulators hit Barclays with a $44 million fine linked to London gold fix

SAN FRANCISCO (MarketWatch)—Gold futures settled lower Friday on the back of better-than-expected data on new U.S. home sales and strength in U.S. equities, prompting prices to tally a mild loss for the week.

Gold for June delivery
US:GCM4
pulled back by $3.30, or 0.3%, to settle at $1,291.70 an ounce on the Comex division of the New York Mercantile Exchange, for a modest decline of 0.1% on the week.

AFP/Getty Images

Gold traded in a narrow $20 range this week.

Meanwhile, July silver
US:SIN4
fell 10 cents, or 0.5%, to $19.42 an ounce—about 0.5% higher on the week.

Prices closing out the week only little changed has “become the norm in gold as futures have failed to end a week higher than $1,320 or lower than $1,280 this quarter,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary.

“Bottom line, the gold market is ‘stuck’ at the $1,300 level and until we see a material shift in market dynamics such as a correction in stocks, or some sort of surprise from the Fed, that is set to continue as gold is trading in a trendless range,” he said.

Other analysts pointed out the significance of gold’s narrow trading range this week.

“The steady sideways movement of the gold price has now continued for over a month in such a tight range that its subsequent move will be very strong, more than a simple short-term wave,” said Julian Phillips, founder of and contributor to GoldForecaster.com. “Gold investors should be cautious.”

London gold fix

In the news Friday, the U.K.’s Financial Conduct Authority on Friday fined Barclays 26 million pounds ($43.9 million) after one of its traders allegedly manipulated the London gold fix global price benchmark.

The regular said Barclays trader Daniel Plunkett took advantage of weaknesses in the banks’ systems in June 2012 to try to influence the gold fix, which is used by jewelers and miners and other to price their deals.

‘The Barclays incident is likely just the tip of the iceberg in respect of today’s gold market.’
Brien Lundin, Gold Newsletter

“The Barclays incident is likely just the tip of the iceberg in respect of today’s gold market,” said Brien Lundin, editor of Gold Newsletter.

“When paper derivatives of a commodity are traded in such magnitude that their notional supply is a massive multiple of the real-world supply, then the price of that commodity can be manipulated by anyone with enough money or knowledge,” he said. “That’s what has been happening with gold, as the ‘paper gold’ market in the West places a price on the metal that is far lower than Eastern buyers judge to be fair value.”

What to watch

In a note Friday, strategists at Deutsche Bank attributed gold’s narrow trading range over the past month to “the opposing forces of dollar strength and a U.S. bond market rally.”

But they “view the decline in U.S. real yields as unsustainable and [that] consequently exposes gold to ongoing downside risks.”

The Deutsche Bank strategists maintained their bearish gold-price outlook and said price weakness will be driven by an acceleration in U.S. growth and a strong turn in the U.S. dollar. They forecast average 2014 gold prices of $1,261 an ounce. For 2015, they see an average of $1,163.

Gold trading on Comex will be closed on Monday for the Memorial Day holiday. Traders will be watching developments tied to the election in Ukraine to help gauge the metal’s safe-haven appeal.

“We believe gold could either sell off next week with a reduction in Ukrainian tension or proceed sharply higher if Russia does not accept the results [of the election] and moves forces back along the border,” said Jeffrey Wright, managing director at H.C. Wainwright.

Elsewhere in metals trading on Friday, platinum for July delivery
US:PLN4
fell $20.30, or 1.4%, to end at $1,472.80 an ounce, but finished about 0.5% higher for the week. June palladium
US:PAM4
shed $5, or 0.6%, to $831.45 an ounce, up about 2% on the week.

High-grade copper for July delivery
US:HGN4
tacked on nearly 3 cents, or 0.8%, to $3.17 a pound, for a gain of roughly 0.6% for the week.

Shares of gold and silver miners traded lower Friday afternoon, with the Philadelphia Gold and Silver Index
XAU, -0.06%
down 0.8%, ready for a weekly loss of around 0.9%. Shares of the SPDR Gold Trust
GLD, +0.22%
fell 0.2%, down about 0.1% for the week.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.